Friday, September 19, 2008

"Paulson, Bernanke, and Congress are conspiring to make the US taxpayer the fall guy for financial stupidity by banks and brokers. Congress is now willing to ram through legislation at the last moment, even though Senate Majority Leader Reid Says 'No One Knows What to Do'.

U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed moving troubled assets from the balance sheets of American financial companies into a new institution.

Options under consideration include establishing an $800 billion fund to purchase so-called failed assets and a separate $400 billion pool at the Federal Deposit Insurance Corp. to insure investors in money-market funds, said two people briefed by congressional staff who spoke on condition of anonymity because the plans may change.

Mish's Comment: I too would want to be anonymous for forever and a day if I was sponsoring a $1.2 trillion bailout of US corporations at taxpayer expense.

Another possibility is using Fannie and Freddie, the federally chartered mortgage-finance companies seized by the government last week, to buy assets, one of the people said.

"We will try to put a bill together and do it fairly quickly," House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, said after the meeting. "We are not in a position to give you any specifics right now" on the proposals, he said when asked about the potential cost.

Mish's Comment: Now there's "good thinking"! There is no time to act, so let's act quickly by passing a $1.2 trillion bailout quick enough so Congressional recess can happen on schedule.

Regardless of your party affiliation, and with the exception of Ron Paul, I urge everyone to vote against the incumbent in every race.

Professor Bennet Sedacca

The Pain Trade

The Federal Government just declared war on short sellers.Will it help the real economy? No sir.Will it help the value of my house? Nope.Will it blow up hedge funds? Yep.Is it a selling opportunity? You betcha.Will the rally last ? No.Will earnings increase? Actually I think they will fall.

My conclusion? The pain trade, after this burst, is a crash in October. Yes, a crash. I am not talking my book as my firm is delta neutral.

What makes me ill is that folks in the media are the mouth pieces of irresponsible Government officials.

I am sick to my stomach watching Socialism take over. And with that, I head to the Ryder Cup.